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SALT LAKE CITY — While housing prices in Utah and across the West continue to climb at staggering rates and price more and more would-be homebuyers out of the market, rents are far from stagnant.
Rent prices aren't escalating at the same rate as home prices, but they have been on a steep upward trajectory, especially in high-growth states in the West.
Compared to other major metropolitan areas across the country, western states stand out for the biggest rent price jumps over the past two years, after the COVID-19 pandemic sent the U.S. housing market into upheaval.
Led only by metros in Nevada and Idaho, Salt Lake City ranks as No. 3 in the nation among large metros that saw the biggest price increases from 2019 to 2022, according to a new report from the real estate site Stessa.
Here's how the top 10 large metro areas broke out, according to the Stessa analysis, which used U.S. Department of Housing and Urban Development and Census Bureau data to determine which areas have seen the sharpest rent price jumps:
Large U.S. metros where rents have spiked the most
- Sacramento-Roseville-Folsom, California — Rent jumped 25.3%, up $369 from a median rent price of $1,461 in 2019 to $1,830 in 2022.
- Las Vegas-Henderson-Paradise, Nevada — Rent jumped 24.8%, up $295 from a median rent price of $1,190 in 2019 to $1,485 in 2022.
- Salt Lake City, Utah — Rent jumped 24.6%, up $291 from a median rent price of $1,184 in 2019 to $1,475 in 2022.
- Phoenix-Mesa-Chandler, Arizona — Rent jumped 22.3%, up $283 from a median rent price of $1,270 in 2019 to $1,553 in 2022.
- Jacksonville, Florida — Rent jumped 22%, up $255 from a median rent price of $1,159 in 2019 to $1,414 in 2022.
- Riverside-San Bernardino-Ontario, California — Rent jumped 21.6%, up $327 from a median rent price of $1,515 in 2019 to $1,842 in 2022.
- Orlando-Kissimmee-Stanford, Florida — Rent jumped 20.3%, up $281 from a median rent price of $1,382 in 2019 to $1,663 in 2022.
- Tampa-St. Petersburg-Clearwater, Florida — Rent jumped 20%, up $252 from a median rent price of $1,259 in 2019 to $1,511 in 2022.
- Portland-Vancouver-Hillsboro, Oregon-Washington — Rent jumped 19.4%, up $314 from a median rent price of $1,618 in 2019 to $1,932 in 2022.
- Fresno, California — Rent jumped 19.3%, up $216 from a median rent price of $1,121 in 2019 to $1,337 in 2022.
Should you rent instead of buy in Utah?
While rents are indeed going up in The Beehive State, they haven't gone up as fast as home prices over the past two years, notes Paul Smith, executive director of the Utah Apartment Association.
Home prices have gone up as high as 50% in two years, Smith said, while rental rates have only increased half that — about 12% to 15% a year.
"Yeah, rents have gone up, but it's only natural since home prices have gone up twice as fast," Smith said. Therefore, he argues it is more affordable these days to rent than it is to buy.
Typically, buying a home is a better long-term investment. Nowadays, as prices continue to climb, know that, depending on your area, you'll likely need to stay in your home longer — perhaps five years rather than three years compared to pre-pandemic times — in order to get a return on your investment, according to a recent Wall Street Journal analysis.
In today's market, however, buyers are wondering if they should wait for a potential price drop-off. Keep in mind local housing experts do not predict a "bubble" popping or price drops, noting Utah's housing supply was already behind the state's rapid population growth even before the pandemic spurred many Americans to reevaluate their lives and look to the West for larger homes at smaller price points.
As mortgage rates continue to rise, Utah's severe housing shortage persists. Local experts have warned rates may help cool demand, but in fast-growing areas like Utah, they may only slow price increases — not stop them — while pricing out even more would-be homebuyers.
Is greed the reason why prices are going up?
As renters become increasingly frustrated with home and rental prices, Smith said landlords hear — and often bear the brunt — of those frustrations. But he said it's not greed that's pushing prices high.
"We're barely passing on our expenses. We're not making a whole lot of money," Smith said of renters.
With inflation and labor shortages, Smith said landlords are having a hard time keeping up with expenses. Rents, he said, are rising "just slightly more than the 11.2% producer price index increase," while only 9% of rents are returned to owners or investors. The rest, 91%, goes to expenses.
"It's not a really high-profit business," Smith said. "So when our expenses are going up as dramatically as they have been, we're either making less money or we need to figure out a way to pass those expenses on."
Meanwhile, supply continues to fall desperately behind demand, and landlords are being inundated with prospective renters.
"Cities are still not approving enough housing. We're just not building enough housing of all sorts," he said. "There's just generating more demand than we have supply. ... And the consequence of that is increases in those housing prices."
While renters are frustrated, Smith said landlords are having a tough time, too, while being "understaffed and overworked."
"When people are frustrated about their rents rising, who do they take it out on? The landlords," Smith said. "So landlords are, you know, getting frustrated customers and they get a lot of crap. And they're just trying to do their job to provide housing for people."
Despite the "perception" that it's a great time to be a landlord, Smith said "it is really a rather difficult time." Labor shortages are making it increasingly difficult to hire employees, especially in maintenance and construction, and so property managers are working "more hours than ever."
Meanwhile, prices for paint, appliances and building materials continue to go up.
"So it is a very difficult time for providers too," he said. "From angry customers yelling at us, to labor shortages to big increases in costs, the rental market is hard on operators too."